Pilson v. Rodeffer

• Decision Date: 28 November 1932
• Docket Number: No. 3344,3359.,3344
• Citation: 61 F.2d 976
• Parties: PILSON v. RODEFFER et al. (two cases). In re RODEFFER (two cases).
• Court: U.S. Court of Appeals — Fourth Circuit

61 F.2d 976 (1932)

PILSON v. RODEFFER et al. (two cases) In re RODEFFER (two cases).

Nos. 3344, 3359.

Circuit Court of Appeals, Fourth Circuit.

November 28, 1932.

J. W. H. Pilson, of Staunton, Va. (Cochran & Pilson, of Staunton, Va., on the brief), for appellant.

John T. Harris and Charles A. Hammer, both of Harrisonburg, Va., for appellees.

Before NORTHCOTT and SOPER, Circuit Judges, and MEEKINS, District Judge.

NORTHCOTT, Circuit Judge.

This appeal brings up for review an order entered in April, 1932, in the District Court of the United States for the Western District of Virginia, in the case of In re Henry A. Rodeffer, bankrupt, holding that a certain paper writing executed by the bankrupt, before bankruptcy, was a deed of trust and not an assignment for the benefit of creditors.

Rodeffer, the bankrupt, a farmer, being heavily involved, and undoubtedly insolvent, on the 22d day of December, 1930, executed a deed to one N. I. Kagey, trustee, conveying practically all the property then possessed by him, including all his household and kitchen furniture, except such as was exempt to him under a Virginia statute, known as the "Poor Debtor's Law."

Rodeffer's wife joined in this deed; the pertinent parts of which are as follows:

"This Deed made this 22nd day of December, 1930, between Henry A. Rodeffer and Laura E. Rodeffer, his wife, of Weyers Cave, in the County of Augusta, State of Virginia, parties of the first part, and N. I. Kagey, Trustee, of Weyers Cave, in Augusta County, Virginia, party of the second part,

"Witnesseth:

"That in consideration of One Dollar ($1.00) cash in hand paid, the receipt whereof is hereby acknowledged, the said parties of the first part do grant and convey, with General Warranty of Title, unto N. I. Kagey, Trustee, the following described property, to-wit."

Then follows a description of 6 parcels of land, which description concludes: "Together with all buildings on said several tracts of land, with the appurtenances thereunto belonging, it being the intent and purpose to convey all of the above lands to the said trustee upon the trust hereinafter mentioned, and reference being here made to the several deeds referred to and the title papers therein referred to for greater certainty of description of the real estate herein conveyed."

Then follows a description of a Ford automobile and of some other physical personal property (of rather slight value), which is followed by:

"It being the intent and purpose to convey to the grantee all of the household and kitchen furniture which they possess with the exception of such as is exempt to them under the poor debtors law.

"In Trust Nevertheless to secure the payment of the following debts of the said Henry A. Rodeffer:

"First, the costs of administering this trust, including a five per cent commission to the trustee herein and a reasonable fee to the attorney preparing this deed; and, after the costs of the administration of this trust have been paid, to secure as first charges upon the said estate, real and personal, the debts listed as Class A herein, and as second charge and subordinate to the debts listed as Class A, those listed as Class B."

Then follow the numerous debts in "Class A," to be paid with interest and charges. The remainder of the instrument reads as follows:

"Class B.

"After the payment of the costs of administering this trust, which shall have first been paid, and after the debts hereinbefore mentioned, which shall constitute Class A herein, have been paid in full, with the interest thereon, then whatever remains shall be applied to the payment of the debts due to the estate of the late John W. Carpenter, which shall constitute Class B under this deed. Which indebtedness to the said Carpenter estate is evidenced by the notes or bonds of Henry A. Rodeffer, grantor herein, the dates and amounts of which are unknown to him, but aggregate from $13,000 to $15,000.

"It being understood that all of the debts hereinbefore listed as Class A are of equal dignity and shall be paid in full before any part is applied to the debts listed as Class B.

"It is understood and the trustee herein named is directed to keep the buildings upon the properties herein conveyed and their contents insured in some solvent stock insurance company, with loss payable clause to the trustee herein as his interest may appear, and the cost of such insurance shall be treated as a part of the cost of administration of the estate and shall be paid as such.

"In the event the said notes herein secured are not paid at maturity, or, if renewed, said renewals, or any of them, are not paid at maturity, then, upon the request of any beneficiary secured hereunder, the trustee shall execute this deed by selling the real estate upon the following terms: One-third (1/3) of the purchase money cash upon the day of sale; and the remainder to be paid in one and two years thereafter, the purchaser to execute bonds therefor, with good security and the payment of such bonds to be secured by a Vendor's Lien in the deed of conveyance; and in the event that any creditor secured shall demand a sale of the property, then the personal property hereinabove described shall be sold for cash.

"Witness the following signatures and seals:

"Signed Henry A. Rodeffer Seal "Signed Laura E. Rodeffer Seal."

It will be seen that Rodeffer intended that all his creditors should participate in the proceeds realized from the sale of his property, except the estate of John W. Carpenter. It developed that by inadvertence some small creditors were omitted from those listed in "Class A."

Carpenter, who was a creditor of Rodeffer to the extent of some $19,000, had died on December 9, 1930, and on December 15, following, Carpenter's administrator wrote Rodeffer requesting a conference in respect to his indebtedness to the estate. Rodeffer's response to this request was the making of the deed above set out, denying Carpenter's estate any participation in his assets.

The deed in question attempted to secure debts, listed in "Class A," amounting to more than $67,000, and there was finally realized from the bankrupt's property at the sale by the trustee, $28,827.

On December 22, 1930, the same day the deed was executed, Rodeffer, together with his son and son-in-law, executed a bill of sale to one Toppin, conveying cattle and other personal property for the purchase price of $5,019.17, of which sum one-half ($2,509.85) was to be paid to the bankrupt for his one-half interest in the property. The amount due the bankrupt was evidenced by two notes, one for $2,000, and the other for $509.85. On the same day, December 22, 1930, the said Rodeffer transferred the note for $509.85 to J. Givens Fulton, Jr., a creditor, and the note for $2,000 to Rebecca F. Early, his sister-in-law, in payment of a pre-existing debt owing by the said Rodeffer to her.

Again on the same day, December 22, 1930, Ivan E. Rodeffer, son of the said Henry A. Rodeffer, conveyed to the said N. I. Kagey, trustee, a large amount of personal property, consisting of live stock, farming machinery, feed, interest in growing crops, household furniture, chickens, etc., all of which property was described as being located on the farm occupied by the said grantor and owned by the said Henry A. Rodeffer and known as his Nicholas farm, to secure in "Class I" as a first lien certain notes owing to the Weyers Cave Bank, Incorporated, and others, aggregating $2,665, and in "Class II" subordinate to those above mentioned to secure the payment of a note or bond executed by Ivan E. Rodeffer to John W. Carpenter for the principal sum of $900.

On January 31, 1931, appellant, Carpenter's administrator, instituted a suit in the circuit court of Augusta county, Va., seeking to have the deed and bill of sale of December 22, 1930, construed as a general deed of assignment for the benefit of all creditors, and asking that any preference attempted to be created thereby be set aside.

On April 24, 1931, two days more than four months after the date of the execution of the deed in question, Henry A. Rodeffer filed a petition in bankruptcy, and on May 8, 1931, was adjudicated a bankrupt.

Appellant petitioned the bankruptcy court to be allowed to make Rodeffer and his trustee in bankruptcy parties defendant to the suit in the state court, but this was denied on the ground that the bankruptcy court had "acquired absolute and exclusive jurisdiction of the property and person of the bankrupt." Appellant then petitioned the court to construe the deed in question as a general deed of assignment, and to set aside all preferences.

The statute relied upon by appellant...